City and mall officials have started negotiations.

Nov. 9, 2012

A rendering shows an overhead view of Foothills, the redeveloped Foothills Mall. Courtesy of Alberta Development Partners

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Requirements for eminent domain

If eminent domain is exercised, the URA’s decision will be guided by the following criteria: • All requirements of the Urban Renewal Law, including eminent domain procedures, have been met. • Other possible alternatives have been thoroughly considered by the authority • Good-faith negotiations by the URA and/or the project developer have been rejected by the property owner. • Reasonable efforts have been undertaken to understand and address the property owner’s position and his or her desires for the property and for any existing business on the site, and work with the owner to either include the owner in project planning or purchase the property and relocate the owner in accordance with Urban Renewal Law. Source: Midtown Urban Renewal Plan

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An agreement approved Thursday between the Fort Collins City Council, acting as the Urban Renewal Authority, and the new owners of Foothills Mall could begin to formalize the city’s ability to take land by eminent domain at the 100-acre mall property.

The URA board unanimously approved an agreement kicking off a 180-day window to reach consensus on the level of tax increment assistance, eligible costs intended to be funded through tax increments and other points to be provided by the city, said Josh Birks, the city’s economic health director.

Most of the 8-page agreement is legal and technical, but it sets the stage for Walton Foothills Holdings IV — the limited liability company formed by Alberta Development Partners and Walton Street Capital — to ask the city to acquire certain property necessary to complete the redevelopment.

The agreement does not commit the city to using eminent domain nor does it cite a specific property as a potential target. It is well known, however, that mall owners hope to redevelop the 100-acre site without Sears, one of the original anchor stores at the west end of the 37-year-old mall.

The Foothills site plan unveiled two months ago shows several stores between 10,000 and 40,000 square feet where the existing Sears stands. Alberta Development Partners and Walton Street Capital, which bought Foothills Mall in July, offered to buy out Sears but the struggling retail giant rejected initial offers.

Alberta’s founder, Don Provost, has said the company would come back with another offer; and at the first community meeting told a standing-room-only crowd: “We don’t believe Sears is a retailer that works in our redevelopment plan.” Alberta officials did not return phone calls seeking comment for this story.

Sears officials said as recently as last week they have no agreement with Alberta and continue to serve customers in Fort Collins.

How far the developer and city are willing to go to force businesses off the property will only become clear with time. City Manager Darin Atteberry told the URA board Thursday the city is “doing everything it can to minimize the possibility” of having to use eminent domain but said the probability that it will be necessary is relatively high. “We knew going in that (eminent domain) was something we might have to consider and it looks (like) the probability is high that we will have to consider it, but we also have a lot of work to do before we get to that point.”

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The property is in an urban renewal area, meaning eminent domain — taking a property in exchange for fair market value — is a tool available to the developer and city. If Alberta determines redevelopment is unfeasible with Sears in the mix, it could force the city into choosing between a project it has waited more than a decade to see to fruition, or keeping Sears.

If Alberta deems its redevelopment plan is best served by removing Sears and wants the city’s help in acquiring the property, Birks said, “it’s not a rock-and-a-hard-place decision. It’s not an either this or that choice. It is still a gray area and the board has the full discretion to make the choice.”

“It could be an opportunity for the URA board to say it’s not interested,” he said, meaning the city could kick the decision back to Alberta to see if it wanted to change its plans or perhaps sell the property.

The city has a strong history of protecting private property rights, Atteberry said, but acknowledged the Foothills Mall project “has been one of the highest priority projects for the city” in the past eight or nine years since he’s been city manager.

The City Council is tentatively set to discuss the mall project on Dec. 4.

Private property rights are important, said City Councilman Ben Manvel, who on Thursday commented on the unusual step of using eminent domain for a commercial building. “To do it for a road is one thing, to do it for a shopping center is farther down the list for most people, including me.”

“It’s not a real easy decision. I’m not one to say eminent domain is always fine, but I’m not one to stay it should be absolutely off the table,” Manvel said.